Spinning success from diverse opportunities

N. Ramakrishnan | Updated on March 24, 2013

L. Kannan, Founder and CTO, Vortex Engineering Pvt Ltd; and CEO & Director, Microspin Machine Works Pvt Ltd. — N. Ramakrishnan

One converts cotton into yarn and the other takes ATM to Bharat

“I have a finger in many pies,” says L. Kannan. “This is one,” he adds, as we meet in the office of Microspin Machine Works, in a semi-industrial area in south Chennai.

Microspin Machine Works, which designs and makes machinery to convert cotton into yarn, is one of the two ventures that Kannan has started. The other is Vortex Engineering, which Kannan started in 2001 to make the textile machinery, but now concentrates on making automated teller machines.

The 45-year-old Kannan, a mechanical engineer from IIT-Madras, is hands-off now as far as Vortex Engineering is concerned, having convinced the board to appoint a chief executive officer. He still holds a small stake and is its chief technology officer.

After passing out of IIT, Kannan says he did not work anywhere. He was involved with voluntary groups and non-governmental organisations related to development, poverty and environment. It was during this phase that Kannan got closely associated with the textile sector.

“I didn’t even fancy myself as an entrepreneur,” he says. Those days, the idea of entrepreneurship was not known. “I didn’t set out to become an entrepreneur. I wanted to pursue something I was passionate about,” says Kannan.

He set up Vortex Engineering in 2001, to design and make a machine that will convert cotton into yarn – first the seeds and waste are removed from the cotton, which is then converted into yarn. Kannan says he designed most of the machines involved in this process.

It was by chance that Vortex Engineering got into making ATMs. In 2004-05, IIT-Madras had done a study to find out if banking services could be extended to the rural population using information and communication technology.

The problems in using a conventional ATM in rural areas were many. Power supply was an issue. People were not used to keying in four-digit numbers to access their accounts. Transporting the bulky ATMs on rural roads was an issue. Most often people used currency notes of smaller denominations. Besides, the notes would be crumpled and soiled, which a conventional ATM would not be able to handle.

However, Ashok Jhunjhunwala, Professor in the Department of Electrical Engineering, IIT-Madras, wondered whether these attributes could be used design an ATM with a rural focus. That is where Kannan and his Vortex Engineering came into the picture.

Pact with IIT Madras

Kannan says he knew Jhunjhunwala for a long time and when this question was thrown at him, he came up with a hand-cranked machine.

After several iterations, Vortex designed an ATM that could be installed in rural areas. Vortex and IIT-M formally signed an agreement, to jointly develop the product. Vortex would pay a royalty to IIT for using its technology. Vortex also got some venture capital funding through an IIT-affiliated fund.

The first few machines were deployed near Cuddalore, Tamil Nadu, for State Bank of India, to disburse money under the Government’s rural employment guarantee programme.

However, Vortex got its first big break when SBI was to inaugurate its 10,000th ATM in the then Finance Minister Pranab Mukherjee’s constituency. A conventional ATM that had been ordered could not be installed and a few days ahead of the inauguration, Vortex got a frantic call from SBI if it could help out. Vortex took up the challenge and did just that. It supplied its rural ATM – branded Gramateller – which is more energy efficient than a conventional machine.

Vortex has about 700 machines installed across the country and has also developed an ATM that can be installed in urban areas, branded Ecoteller. It has also bagged an order to supply about 10,000 machines in about 18 months, under a massive joint programme of the public sector banks to install nearly 70,000 ATMs across the country.

Facility in Puducherry

Vortex, according to Kannan, has set up a manufacturing capacity in Puducherry, apart from the one in Chennai. It plans to move into a new, larger facility in Chennai that will take its total capacity to about 500 units a month.

In this period, Vortex has raised nearly Rs 100 crore through various rounds of venture capital funding. Kannan says he has only a small stake in the company now.

How difficult was it for him to give up his stake? By 2007, he recalls, he told the board that Vortex should appoint a professional CEO. “I knew that for this work to live out to its promise, requires a number of things to be done. I have too many limitations to be able to take it there. It took me about two years to convince the board that I am not being shy or modest and that what I am saying is well thought out,” says Kannan. And, he adds, “we could have grown much faster if they had taken me at face value.”

Founded Microspin

Once the ATM business started growing, Kannan decided to move the textile machinery business out of Vortex and founded Microspin Machine Works, in 2011. He is the CEO and Director of Microspin.

This company has developed a technology, the patent for which is pending, to convert cotton into yarn in a manner that is about 100 times smaller than the scale at which it is done conventionally, says Kannan. “It is like we have invented a desk-top machine in a world where there are only mainframes,” he adds.

Kannan says this machine can transform the structure of the textile industry. The machines – about 400-450 spindles capacity – have been supplied to an organisation in Hyderabad. Microspin has now developed a machine with 2,000 spindles capacity, the first of which it will shortly ship to a buyer in Maharashtra.

In the spinning industry, a 50,000-spindles capacity is considered the norm. Microspin’s machines, Kannan says, considerably bring down the minimum viable size of a spinning unit.

Vortex, Kannan says, can be a Rs 250-crore company in a couple of years, while Microspin’s market size and potential are huge, given the size of the spinning industry in the country.


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Published on March 24, 2013

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